Welcome back to the Telkomsel saga, where the biggest telecommunications provider in Indonesia was controversially declared bankrupt on Friday by the country’s state court. Telkom, the parent company of Telkomsel then issued an official statement the next day (via IndoTelko) saying that Telkomsel is a very healthy company, and that it is commited to obeying the law.
Telkomsel then issued a similar statement, saying that it is still a financially capable company, and is looking to resolve this issue immediately. The company also claimed that the account payable of IDR 5.3 billion ($560,000) to its voucher top-up distributor Prima Jaya is still under dispute. IndoTelko cites Asli Brahmana, the corporate secretary of Telkomsel as saying that they will ensure the well-being of Telkomsel’s stakeholders, including business partners such as Prima Jaya. Telkomsel will appeal this decision.
Bankruptcy usually means that the company’s assets will be seized by the government to pay out to all creditors, which here would also include its overdue account payables to Prima Jaya and Extent Media Indonesia. I’m not sure if or when that could happen in this case, but Detik cites an Indonesian Telecommunication Regulatory Authority (BRTI) representative as saying that they will do their utmost to ensure that Telkomsel’s 110 million subscribers will not be affected by this process.
More to this case than meets the eye?
Said Didu, the former secretary of the state-owned enterprises ministry (BUMN), speculated that there might be a problem with the court proceedings. He explained that the judge should have used a regular civil law to resolve this issue, but instead the judge used bankruptcy law.
Bankruptcy law can only be used when the disputed debts’ value is so big that it can bankrupt the company. Said Didu explained that the account payable of mere billions of rupiahs is not enough to bankrupt Telkomsel’s trillions of rupiahs worth of assets. Didu hopes that Telkomsel, alongside BUMN which also has a stake on the parent company, will fight and resolve this confusion in the courts.
My colleague Joshua and I think that Telkomsel will not become bankrupt per se. Looking over their 2011 annual report, we can see that the company’s profit last year reached nearly IDR 13 trillion ($1.374 billion). So several debts of a mere few billion rupiahs would not be that big of a deal for Telkomsel. At the end of the day, this will simply be seen as bad publicity for the company, and ultimately if Didu is correct, it’s a bad precedent for the Indonesian legal system.
Stay updated on the go with our mobile app.
Get latest insights with smoother, more personalized experience through TIA mobile app.
